The Street seems generally upbeat on Microsoft's bold move, despite the probability that margins will take a hit as the company extends its position in the hardware market. Keep in mind that Microsoft has actually been making hardware for a long time: The Xbox and Kinect are the most obvious example, and they have long been a player in mice; let's for the moment not mention the Zune music player and Kin mobile phone.

As I noted yesterday, there is still zero information on specific pricing and availability, and little clarity on the cost structure for the new tablets, so modeling the financial impact on Microsoft results is basically a guessing game. But the general view is that if the tablets gain even modest traction, they should be additive to revenue and EPS.

Here are some excerpts from this morning's batch of Street commentary on the debut of Surface.

Raimo Lenschow, Barclays Capital: "Regardless of how the tablet performs, confusion surrounds the timing of Microsoft's decision to get back into the hardware business in a meaningful way," he notes in a research report. "With the forthcoming release of Windows 8, the company is relying on their existing OEM partners to sell millions of new PCs with the new operating system installed. At the same time Microsoft has released the Surface, independent of the OEMs, that is meant to bring out all of the great functionality of Windows 8. So, the company has potentially damaged their relationships with the OEMs (although management commented at the onset of the presentation yesterday that they remain committed to those partnerships), while also creating confusion for consumers, as they are now given the choice of purchasing a tablet that is meant to harness the functionality of Windows 8 versus purchasing a traditional PC with Windows 8 that may not allow the user to realize all of the benefits of the new OS. The bottom line is that we still see a significant amount of confusion surrounding the Windows 8 release."

Ed Maguire, CLSA Asia-Pacific Markets: "Though Apple clearly has a 2-year lead in tablet computing, Microsoft has taken the time to ensure its entry into endpoint hardware offers an innovative design and creative approach," he writes. "Offline conversations with management suggest Surface is not intending to undercut partners, but to provide a reference standard for Windows 8 devices. It’s unclear what net impact Surface will have on overall Windows margins, but our impression is that Surface will be marketed as a premium offering not a loss leader."

Rick Sherlund, Nomura: "The hardware appeared well engineered and elegantly designed, offering a thin, lightweight, tablet or Ultrabook-like form-factor, optimized for both content consumption and content production like the Ultrabook-touch devices we have written about over the past several quarters," he writes. "Our view is that while Microsoft is borrowing a page out of Apple’s playbook in doing its own hardware, unlike Apple, Microsoft will be collaborating with partners and encouraging them to innovate with new hardware form factors and ‘prime the pump’ around Windows 8." Sherlund notes that "While being in the hardware business will be dampening to overall margins, this will likely add to gross profit assuming Microsoft’s high-margin Windows 8 volume will expand ... we are more focused on the overall profit contribution."

Shaw Wu, Sterne Agee: "Our take on this is mixed," he writes. "On the positive, MSFT is being more proactive in addressing the mobile device market where it has had little traction. On the negative, this will be cannibalistic vs. Windows partners including Dell, HP, Acer, Lenovo, Nokia and HTC. We would like to note this isn't the first time MSFT has attempted vertical integration. It did so with Zune, Kin (in smart phones) and Xbox. We will need to see how the customer response is. We continue to see Apple iOS and Google Android consolidating share."

Kirk Materne, Evercore: "While there are some obvious questions as it relates to how Microsoft's hardware partners will react to the launch of the Surface, we believe that this was ultimately the direction in which Microsoft was going to have to move if it wanted to have a shot at gaining mindshare in the tablet market, as Microsoft will now be able to control the pricing and ultimately the end-user experience of this device," he writes. "In terms of differentiating features, in our view, the cover that doubles as a keyboard was clearly the highlight, especially as it seems as though MSFT is targeting the RT version at students and consumers (Office Home & Student is bundled), with the Pro version more tailored for professionals."

Mark Moerdler, Bernstein Research: "We see the unveiling of the Surface for Windows 8 as in-line with our overall thesis on the company that Windows 8 will be credible tablet operating system and will gain major market share, passing Android tobecome the number 2 tablet in the market."

Brian Blair, Wedge Partners: Blair writes that he is not convinced that Microsoft can catch the Apple iPad. "Out of the gate, we're skeptical. ," he writes. "The iPad has existed for over two years and has a software platform that is rich with features and applications and offers an interface that embodies ease of use. The jury is still out on Windows 8 for the tablet. The best indicator we have right now for demand for Microsoft's tile-based approach to a user interface is the Windows Phone, which isn't selling very well according to Nokia. Will this do better? ... We think it comes down to one thing? Price. And this is where its going to get tricky. Can Microsoft and the other manufacturing players make an ARM-based version for Surface and sell it for under $499 profitably? Will it be better than the $399 iPad 2? We don't think so, at least not right away. On price, our view is that Surface has to be less than the iPad for consumers to really consider it. The Intel version will almost certainly be in the $700 - $1000 range. We have a hard time envisioning successful sell through at those price points. And don't dismiss Android just yet, we expect to see a new approach to tablets from Google at their I/O conference next week."